Analysis Of Trend And Factors On The Price Fluctuation In China

Prices are the core indicators of economic operation, the "indicator" of hot and cold conditions of the economy, and there are a lot of factors that caused the price fluctuation. Changes of supply and demand of goods and services, changes in money supply and fiscal policy would all have certain impacts on the volatility of prices. Price fluctuations and the impact factors are the hot topics to domestic and foreign scholars.The fluctuations of price could make a balance between supply and demand, according to traditional price theory, which helps to achieve price stability and economy development. However, in the real process of the market operation, if the fluctuations become too frequent or too fierce it would destroy the market balance between supply and demand. In that case, an appropriate intervention should be taken during the management of the economy.The innovations of this paper are: first, compared to existing research, this paper selects monthly CPI data from 1993 to 2008, while the selected factors data from 1996 to 2008, with a larger sample, the results of the study is more credible; Secondly, in the pre-treatment of all time series, we use X-12-ARIMA model, and for the CPI we introduce the Spring Festival factor, which excludes the impact of seasonal factors, and makes the test of relationship between factors and CPI more reliable.The structure of this research is as follows:Part One is intrduction, we talk about the significance of the topics, and introduces the contents and the main research methods of this paper.Part Two is a reviewe of the related literature both home and abroad.In Part Three, we introduce the methods that used in this paper: the X-12-ARIMA seasonal adjustment method, unit root and cointegration test, Granger causality test, and impulse response function.In Partr Four, we take a seasonal adjustment on the Chinese CPI monthly data from 1993 to 2008, then analyze the characteristics and the trend of the price fluctuation, which comes to the conclusion that the price would remain stable in 2009, and there would be a slight deflationary pressure.In Part Five, we first take unit root and cointegration test for each variable, then check the relationships between all the factor and CPI by Granger causality test and set up VEC model, using impulse response function to verify the relationships between those variables and CPI.Part Six is the conclusion and suggestion. We give some policy recommendations based on the above analysis.